They are planning High Court applications in Belfast and Dublin seeking leave to apply for a judicial review. The announcement followed a meeting with the Northern Ireland Secretary Theresa Villiers.

Outside Hillsborough Castle, Co Down, Michael Gallagher - whose son Aiden was killed in the attack - said: "We're tired of waiting for a decision. We could go on like this for the next 10, 20 years. We've been left with no choice but to go down the legal route."

Last summer copies of a confidential report - specially commissioned by the families to review all the various police investigations - were handed over to the Irish Justice Minister Alan Shatter and the then Northern Ireland Secretary Owen Paterson.

The Omagh families have been pushing for a full cross-border tribunal of investigation following the acquittal in December 2007 of Sean Hoey, an electrician from Jonesborough, south Armagh, the only man to stand trial for the murders.

No details of the report were released, but it is understood the 60-page document claims significant security failings before, during and after the bomb exploded in Omagh's Market Street in August 1998, killing 29 people, including a mother pregnant with twins. It alleges that the RUC, Garda, MI5 and the FBI failed to share important intelligence.

The report also claims the discovery of email evidence detailing certain terrorist activity in the Republic but which was not shared with the authorities on the northern side of the border. It is believed to be linked to claims of two separate bomb attacks in Northern Ireland which were allegedly allowed to go ahead undetected in order to protect the identity of an informer.

Mr Gallagher, who spent over an hour with Ms Villiers, claimed she told them she had "significant insight" of the issues involved, but further discussions, including talks with the Irish Government were necessary.

An NIO spokesperson said the Secretary of State was still considering whether it would be in the public interest to hold an inquiry.

She added: "Her meeting with representatives of OSSHG (Omagh Support and Self Help Group) this morning was part of the thorough process she has undertaken to assist in making this decision. The Secretary of State advised the OSSHG that she hopes to make her decision very soon, once she has consulted all those with an interest."